Just how personal do you need to get to sell more?

First, over the last year my Chairman and I have been asking groups of people two questions: How many people regularly buy things recommended to them by Amazon? And what sort of recommendation would they trust? Whilst this isn’t empirical research, between us we have spoken to over 1,000 people and this is what our polling has told us:

If this is right (and it’s quite a large sample across many different demographic groupings) then investing in ‘often bought with’ and customer reviews/ratings may well help influence customer behaviour.

Secondly, in a very well argued piece in the FT Tim Harford explains the vast investment made by retailers such as Amazon, Tesco and Target in algorithms that drive their recommendations may well only really be successful through the application of the law of averages. In other words, they have a customer base of such a scale that even a small percentage increase in sales can be worth the cost and effort. If he’s right (and as one of the UK’s leading statisticians, there’s a fair chance he is) then personalised recommendations is possibly a very expensive undertaking with, unless you have significant scale, a slim chance of a sensible payback.

Funnily enough, looking at our clients’ experiences we don’t think these two pieces of data are unrelated, but we do think they can get overlooked in the rush to embrace personalisation as an online sales driver.

Segmentation vs. Individual Treatment

Where retailers employ an ‘individual history’ approach, virtually all of it is based on automated guesswork informed by a combination of past purchase/account history and/or cookie history (if it’s not wiped – and over 30% of internet users now wipe their history clean regularly). Tim Harford argues that only scale can deliver value from this approach. Our unempirical research would back that up. Why? Well it’s your best guess, and in a world of fast-changing tastes and fashions, I may well have moved on from my last purchase, or made a mistake or bought for someone else and not for me or many other reasons that mean all that processing will deliver nothing. And the problem is unless you talk to me at every stage of my purchase journey, you’ll never know enough about the 'why' to make tracking and processing the 'what' really worthwhile. Unless of course you are enormous, so a small increase that comes with the statistical probability that you’ll get it right for a small number of people, pays back the large sums involved.

So, is there any other sort of personalisation that works for the ‘average’ retailer? A sceptic might argue that much of what is talked about as personalisation, is in reality clever segmentation, as opposed to something tailored to reflect individual needs. They would be right of course and getting this right may well deliver an increase in sales.

The key strategies are:

There are some smart things that technology can help you do without spending a fortune:

The elephant traps are:

Why would people keep shopping online with you? It probably won’t be because you’ve personalised their experience. It will be because you’ve made what they want easy to find and easy to buy at a price point, that is within their acceptable range. It will be because you can get it to them in the timescale they need it and when it arrives it isn’t damaged and it does what you said it would do. It’s as simple as that.